Resolving Differences in Willingness to Pay and Willingness to Accept
AbstractThis paper tests the conjecture that the divergence of willingness to pay and willingness to accept for identical goods is driven by the degree of substitution between goods. In contrast to well-known results for market goods with close substitutes (i.e., candy bars and coffee mugs), the authors' results indicate a convergence of willingness-to-pay and willingness-to-accept measures of value. However, for a nonmarket good with imperfect substitutes (i.e., reduced health risk), the divergence of willingness-to-pay and willingness-to-accept value measures is persistent, even with repeated market participation and full information on the nature of the good. Copyright 1994 by American Economic Association.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 701.
Date of creation: 01 Mar 1994
Date of revision:
Publication status: Published in American Economic Review, March 1994, vol. 84 no. 1, pp. 255-270
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Other versions of this item:
- Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-70, March.
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- > Environmental and Natural Resource Economics > Environmental Economics > Valuation > Contingent valuation method > Willingness to pay versus willingness to accept
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